July 8, 2020

Registered Fund Adviser and Affiliate Censured and Fined for Violations of Section 12(d)(1)(A) (Fund of Funds Limitations) and Compliance Rules

On July 2, 2020, the SEC entered into a settlement order with an adviser and its foreign affiliate (Order) involving violations of the fund-of-funds ownership restrictions in Section 12(d)(1)(A) of the 1940 Act and the compliance rules contained in Rule 38a-1 under the 1940 Act and Rule 206(4)-7 under the Advisers…

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June 26, 2020

Department of Labor Proposes Rule Affecting ESG Plan Investments

On June 23, 2020, the U.S. Department of Labor (DOL) proposed a rule intended to clarify ERISA plan fiduciaries’ responsibilities with respect to environmental, social and governance (ESG) investing. The proposal is designed in part to make clear that ERISA plan fiduciaries may not invest in ESG vehicles when they…

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May 15, 2020

ETF Sponsors Submit Letters to Major Exchanges Regarding ETP Categorization

On May 13, 2020, a group of six ETF sponsors submitted letters to Cboe Global Markets, Inc., NASDAQ, and Intercontinental Exchange Inc. (the parent of NYSE Arca) urging that each exchange adopt exchange listing rules or other means to categorize exchange-traded products (ETPs) differently (ETP Letter).  The ETP Letter proposes…

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May 4, 2020

SEC Fines Fund Adviser for Overvaluing its Securities and Misleading Performance Disclosures

On April 28, 2020, the SEC fined a fund’s adviser in a consent order (Order) for the adviser’s conduct involving the fund’s overvaluation of its securities and the adviser’s misleading statements about the fund’s performance in shareholder communications. The fund primarily invested in non-agency mortgage-backed securities (NA MBS) and, during…

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April 24, 2020

SEC Adopts Rule Clarifying Fair Value Determinations

On April 21, 2020, the SEC proposed Rule 2a-5 under the 1940 Act (Rule) that specifies what is required for a fund (or a business development company) to determine the fair value in good faith of the fund’s investments that do not have readily available market quotations for purposes of Section 2(a)(41) of the 1940 Act and Rule 2a-4 under the 1940 Act.

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April 16, 2020

SEC’s Division of Investment Management Issues Information Update on Exemptive Application Hearing Requests

The SEC’s Division of Investment Management (Division) recently issued an Information Update (Update) regarding changes to the SEC’s procedures for granting exemptive applications filed under the 1940 Act or the Advisers Act.  Before issuing an exemptive order, the SEC provides a public notice summarizing the exemptive relief that will be…

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April 1, 2020

SEC Staff Grants Temporary Relief to Support Open-End Funds

On March 26, 2020, the SEC staff (Staff) issued a no-action letter to the Investment Company Institute (ICI Letter) that provides temporary relief to registered open-end investment companies, other than exchange-traded funds and money market funds (open-end funds), and affiliated persons of such open-end funds (and affiliated persons of such affiliated persons) (Affiliates) from certain restrictions in Section 17(a) of the 1940 Act. Subject to conditions that are specified in the ICI Letter, the Staff will permit Affiliates to rely on Rule 17a-9 to purchase an affiliated open-end fund’s debt securities to enhance such fund’s liquidity or to fund shareholder redemptions in light of the short-term dislocation in the fixed income markets caused by the outbreak of COVID-19.

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March 26, 2020

SEC Provides Temporary Additional Borrowing Flexibility to Registered Investment Companies Affected by Coronavirus

On March 23, 2020, the SEC issued an order (1940 Act Borrowing Order) providing for temporary additional borrowing flexibility to certain registered investment companies (funds) affected by the outbreak of COVID-19 (Coronavirus).  The 1940 Act Borrowing Order provides exemptions from certain requirements of the Investment Company Act of 1940 (1940…

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March 26, 2020

SEC Provides Revised Relief to Assist Registered Funds Affected by the Coronavirus

On March 25, 2020, the SEC issued a revised order superseding a prior order from March 13, 2020 providing relief from certain provisions of the 1940 Act for registered investment companies (funds) whose operations may be affected by the coronavirus (1940 Act Order). The 1940 Act Order addresses: (i) the in-person…

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March 25, 2020

SEC Staff Grants Temporary Relief to Support Money Market Funds

On March 19, 2020, the SEC staff (Staff) issued a no-action letter to the Investment Company Institute (ICI Letter) that provides relief to money market funds (MMFs).  In the ICI Letter, the Staff will permit an affiliated person of an MMF (or an affiliated person of such person) that is…

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